Brent Crude American-style Option

Description

The ICE Brent Crude American-style Option Contract is based on the
underlying ICE Brent Crude Futures Contract (B) and if exercised
will result in a corresponding futures position. The contract is
for American-style exercise, allowing the buyer to exercise an
option any time up to, and including the expiry day.

Market Specifications

Trading Screen Product Name

Brent Crude Futures

Trading Screen Hub Name

North Sea

Hedge Instrument

The delta hedge for the American-Style Option is the Brent Crude Future (B)

Contract Symbol

B

Contract Size

1,000 barrels

Units of Trading

Any multiple of 1,000 barrels

Currency

US Dollars and cents

Settlement Price

One cent ($0.01) per barrel

Trading Price

One cent ($0.01) per barrel

Minimum Price Flux

One cent ($0.01) per barrel

Last Trading Day

Trading shall cease at the end of the designated settlement period
of the ICE Brent Crude Futures Contract three Business Days before
the scheduled cessation of trading for the relevant contract month
of the ICE Brent Crude Futures Contract.

If the day on which trading in the relevant option is due to cease
would be either: (i) the Business Day preceding Christmas Day, or
(ii) the Business Day preceding New Year’s Day, then trading
shall cease on the immediately preceding Business Day

Option Premium / Daily Margin

Due to futures style margining option premiums are not paid/received at the time of the transaction. Rather margins are paid /received every day according to the changing value of the option. The total value to be paid/received is only known when the position is closed (by an opposing sale/purchase, exercise or expiry). The buyer never pays more margin than the cost of the premium. All open contracts are marked-to-market daily.

Exercise and Expiry

ICE Brent Options can be exercised into ICE Brent Futures contracts. ICE Futures Europe options contracts are of American-style exercise, allowing the buyer to exercise call and/or put options up to 17:00 (London time) hours on any Business Day (except on expiry day) during the life of the contracts, by giving an exercise notice to ICE Clear Europe in respect of such options.

On expiry day, the buyer has up to one hour after the end of the designated settlement period of the ICE Brent Futures contract 19:30 (London time) to exercise his options. At that time ICE Clear Europe will automatically exercise all options that are in-the-money on behalf of the Member unless instructed otherwise by the Member.

Strike Price Increments

At launch multiples of $0.01 per barrel ranging from a strike of $1
to a strike of $240. Additional strike prices are added according
to futures price movements.

The at-the-money strike price is the closest interval nearest to
the previous business day's settlement price of the underlying
contract.

Position Reporting

All positions are converted to futures equivalents by way of deltas
and are aggregated with the futures position for daily position
monitoring by the Exchange. The Exchange's daily position
management regime requires that all positions in any contract month
must be reported to the Exchange on a daily basis. The Exchange has
powers to prevent the development of excessive positions or
unwarranted speculation or any other undesirable situation and may
take any steps necessary to resolve such situations including the
ability to mandate members to limit the size of such positions or
to reduce positions where appropriate.

Expiry Limits

The Exchange may impose limits on positions in this contract at its
discretion in accordance with Exchange Rule P3.

Current expiry limit: 6,000 contracts in the last five business
days, up to and including the expiry day in the spot month,
inclusive of futures-equivalent position in Brent Options.

Exemptions from expiry limits may be granted at the
Exchange’s discretion to participants who provide and
document a commercial rationale for their requirement

Contract Security

ICE Clear Europe acts as the central counterparty for trades conducted on ICE Futures Europe and ICE OTC. This enables it to guarantee the financial performance of every contract registered with it by its members (the clearing members of the Exchange) up to and including delivery, exercise and/or settlement. ICE Clear Europe is able to provide margin offsets between the options and the underlying futures contract as well against options positions executed in other option styles.